forex trading

Goldman Now Warns – Japan To Implode

Forex Kong 4 Comments

A little late Goldman as I’ve been onto this for some time now – right?

As many of you know I’ve been “following the hot money” out of Japan over the past several months, as well been keeping a close eye on the Japanese Stock Market “The Nikkei”.

I can only imagine that for many of you, likely absorbed in the daily coverage of things far closer to home ( such as the SP 500 or DOW ) this may appear somewhat “uninteresting” or even “un-applicable” to your current/future trading and investment interests, but encourage you to stick with it long enough to see this through.

Perhaps the recent and “sudden” drop in U.S Equities ( erasing the past 2 months gains in a single 48 hour period ) may have done a better job in “captivating your attention”, as I’ve always suggested that “we’ll see the cracks in Japan first” and that U.S Equities are generally…..always the last to go.

We’ve now seen the very best that The Bank of Japan can do with respect to keeping their own stock market propped up as long as they can, employing the exact same techniques as The Federal Reserve – only on a much larger scale. As The Fed has continued with its tapering and is very close to “shutting off the tap altogether” ( down to only 25 billion per month ) Japan’s QE program has been blistering forward at an alarming pace and has contributed considerably to the recent rally in U.S Stocks – as money floods over seas in search of yield.

This just out from Goldman Sacks:

Goldman Warns Of 6.5% Japanese GDP Collapse – Worst Since Lehman

The greater-than-expected weakness in the consumption snapback signals significant downside risk to our forecast of 4.6% decline for Q2 real GDP (sequential annualized). While we expect lower imports, higher inventories, and other factors to support GDP to some extent, we see negative real GDP growth of around -6.5% as likely, based on the data currently available.

The data is set for release on August 13th.

Japan is headed for economic collapse, and for those of us interested in “taking this seriously” ( keeping in mind that Japan led the market crash of 2007/8 by 6 months ) a miriad of trade opportunities will soon be upon us.

For stock traders again…..a quick look at EWJ – The Japanese Index Fund ETF.

EWJ_July_3_Forex_Kong

EWJ_July_3_Forex_Kong

I can understand how hearing it from an “anonymous gorilla over the internet” may not be enough to get you outside your comfort zone fair….. but Goldman now too?

Japan led the charge lower in 2007 / 2008 and from everything I track / follow I see that this time – things will be no different.

Come check out how we are trading it ( and profiting from it ) in our Members Services Area.

more on the subject: http://confoundedinterest.wordpress.com/2014/08/03/japan-sinks-into-the-abenomics-abyss-debt-to-gdp-at-226-q2-gdp-likely-to-fall-5-house-prices-continue-to-fall/

USD Topping Out – Nikkei Weekly Pin Bar

Forex Kong Got something to say?

The other day’s 100 pip ramp up in USD/JPY has stuck – so far.

Sitting up here at the top end of the range it’s obvious that The BOJ did everything it could “pre U.S GDP debacle” to keep the status quo and defend the line at 101.20.

Please appreciate the significance of this as…..the ultimate “breakdown” in USD/JPY is the signal / breakdown required for this entire “house of cards” to take a serious, serious blow.

The fact that currency markets have literally “stood still” for the past 48 hours as global equities take their first serious hit in months says a lot – affirming “just how desperate” the co-ordinated effort of Central Bankers ( to keep this ball in the air ) has become.

The subsequent breakdown in /ES ( SP 500 futures ) has now broken below major support that “under any normal conditions” would signal what we usually call an “intermediate decline” but again…..considering who we’re up against – I can’t get too excited looking for much further downside short of this thing “popping” higher first.

Nikkei ( as suggested the other day ) appears to have “popped and dropped” back into it’s near term range , also generating an interesting looking “pin bar” on the weekly time frame. The likely “top of wave 2” in our existing framework.

 

Nikkei_Weekly_Aug_01_Forex_Kong

Nikkei_Weekly_Aug_01_Forex_Kong

Considering the waves of poor data that continue to flood out of Japan it’s “all but certain” that the recent ramp job was / was purely Central Bank induced, “yet again” keeping this thing afloat as long as they possibly can.

What we begin to understand here now,  is just how desperate the situation is and that….more than likely the fallout will be much worse / severe than your average “garden variet” BTD ( buy the dip ) and “everything will be ok” type thing.

Trade wise – considering the massive overbought conditions of The U.S Dollar one has to consider looking long both EUR/USD as well GBP/USD here but again with caution as the “solid up trend in USD” would have this trade originally manifest as “counter trend”.

I’m having trouble imagining the U.S Fed letting USD get much further out of the basement here as every single uptick essentially drives the cost of U.S Debt higher ( being denominated in USD of course ) and “how soon we forget” – The Fed still wants to crush the currency.

For those brave enough to get out and challenge the BOJ here in coming days, I see that many of the long JPY pairs have retraced a touch and could provide for “re entry” here next week including short NZD/JPY, CAD/JPY and entry short USD/JPY up here at the top end “should we see reversal first”.

Otherwise the blatantly obvious trade here is looking at EUR, considering that if USD rolls over here and spends the next 6-8 days retracing ( or perhaps generating a much larger fall ) the biggest returns will be seen vs EU currencies.

AUD has clearly had the wind taken out of it on the “risk off” move over the past couple days but it really depends “against what” with AUD/JPY still firmly under the grasp of The BOJ.

I’ll be looking for entry long EUR/USD above 1.34 after the U.S data release here this morning, and will cover the specifics of several other currency pairs ( if it really even matters in this situation ) over the weekend.

The ponzi either goes another “final round” ( likely trading flat to upward for the rest of August / early September ) or it doesn’t.

That’s really all there is too it.

Forex Markets Frozen – Risk Comes Off

Forex Kong 4 Comments

If anyone’s had question as to “just what extent” the Central Banks have got their hands wrapped around these markets – you’ve gotta love this.

A -34 point loss on The SP 500 as U.S Equities erases 2 full months trading in a matter of hours, while the U.S Dollar ( and the entire currency market for what it’s worth ) remains unchanged.

Honestly, on a day like today ( perhaps a year ago ) I would have been dancing around the patio naked, with a sombrero and the Ipad, busting a gut at the ridiculous amount of profits made with my “short risk” positions – but today?

I can’t freakin well believe this. The entire Foreign Exchange Market is on lock down.

The U.S Dollar has moved all of 15 pips vs JPY and for the most part, not a single currency has made a move “any larger” than one might expect during a typical “hour” of normal trading. It’s like nothing has even happened!

Frankly, I’ve never ( in my entire career trading ) seen anything like it, and find this to be extremely concerning.

If a “day like today” can’t get this thing off it’s ass – WTF???

As these things don’t turn on a dime – I understand, but in this case we’ve got a real anomaly here.

This MUST be setting up for something far larger.

USD/JPY – The Only Thing You Need

Forex Kong 8 Comments

A bit of “make it or break it” mentality here this morning as The Nikkei has pushed higher ( with JPY now trading down to it’s “hard-line of support” ) with The U.S Dollar pushing near term highs – where it was turned back in both January and a February re-test.

This puts EUR at “its major line of support” at 1.34 as well GBP “just hanging around” the upper sloping trend line ( daily trend still very much up ) near 169.50

A significant junction to say the least, as correlations across currencies suggest “a move” is certainly pending.

Currency markets should likely make a solid move here in coming days – breaking the summer doldrums.

Transports have clearly broken below support suggesting further decline, and The Dow is now under the “previously suggested top” at 16, 950.

I’ve essentially had this boiled down to a “risk on vs risk off” mentality as of late considering all the larger geopolitical factors, coupled with continued “poor data” coming out of Japan. The Yen has been the largest driving force of this continued rally in risk, as the continued printing, then conversion to USD and purchase of U.S Equities works it’s magic. The Fed passes the buck to The Bank of Japan to do the heavy lifting.

Consider 200 billion per month in paper coming out of Japan, compared to the now “only 35-45 billion” from The Fed to put this in perspective.

JPY_Breakout_Breakdown

JPY_Breakout_Breakdown

 

Japan is where the money is coming from.

A close eye on the current “range” on currency pair USD/JPY is really all you’ll need.

Break out – or breakdown?

Feel free to check out how we’re trading it at www.forexkong.net

U.S GDP To Disapoint – Markets Already Know It

Forex Kong 11 Comments

There is absolutely no “possible way” tomorrow’s second quarter GDP release from the U.S will meet expectations. It’s impossible in any real world terms.

However, considering the “unprecedented times” we find ourselves in as of late ( where employment data is now consistently fudged, housing numbers, PPI, not to mention U.S media coverage of just about everything on Earth ) one has to wonder “just how far they’ll go tomorrow” or if we’ll honestly get a fair kick at the can.

A number under 3% growth would essentially suggest that ( coupled with Q1’s “disaster nose dive” of -2.9% ) The U.S will have generated 2 straight quarters net negative growth – signaling recession.

Recession – a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Now you’d have to appreciate the significance of this, when you consider 6 straight years of printing money like toilet paper / propping up the largest Ponzi scheme known to man, with a consistant message to  “the people” that everything has been moving according to “plan”.

Only to find yourself in recession?

I find it very hard to imagine we’ll get an accurate/legit  number but “even still”……anything, and I mean “anything” less that 3 % and Houston?

I think we’ve got a real problem here.

This could very well be the “event” we’ve been looking for to break out of these horrible / dead / ranging / flat currency markets so…traders should “most certainly not” take this one for granted.

Watching Commodity Currencies – What Can Be Learned

Forex Kong 6 Comments

It’s pretty common knowledge that the currencies of countries with “commodity related economies” such as Australia, New Zealand and Canada are seen as the “darlings of the currency markets” during times when investors feel safe.

Simply put, large institutional investors are able to borrow money such as U.S Dollars or Japanese Yen at extremely low rates of interest, then use these funds to invest in currencies / countries where higher yields and greater opportunities can be found. Australia with its mining / gold related businesses, as well Canada with its oil as a couple of good examples.

The trouble is, as attractive as some of these investment’s may appear during times of economic expansion and loose monetary policy ( with both The Fed and The Bank of Japan flooding the planet with cheap money ) the currencies of these commodity related economies are not widely held, lack liquidity and are not generally sought during times of contraction and tightening.

To a certain extent you can almost consider them the Twitters and Facebooks of the currency markets. Relatively large, fast moves higher when times are good and investors feel safe – but equally the opposite movement when things start to go south.

Think of it like this. If suddenly the world fell into chaos and you were trapped on holidays in The Caymens, unable to return home to your family and friends. What currencies would you look to have there in your pocket / bank account? A handful of Aussie Dollars likely won’t do the trick.

So what can be learned by following these currencies? Can they give you any indication of future movements in global appetite for risk?

Lets have a look.

Australian_Dollar_During_Risk_Aversion

Australian_Dollar_During_Risk_Aversion

As an extreme example we can see prior to the crash of 2008 that the Australian Dollar had enjoyed a fantastic run while times where good – only to then wipe out six years of gains in a matter of months. Commodity related currencies across the board got completely hammered as fearful investors did all they could to get back to the “relative safety” of the currencies originally borrowed – those being the U.S Dollar and Japanese Yen.

Since Central Banks have been printing money like mad since 2009 investors have enjoyed nearly 6 years of bliss, borrowing said funds at extremely low rates of interest and investing where yields can be found.

I’m not suggesting you’ll see another 2008 scenario play out tomorrow, but by keeping an eye on the commodity currencies you may certainly get a bit of lead time – should things turn.

Would You Trust This Guy? – I Would

Forex Kong Got something to say?

Ya that’s me dipshit – so what?

You already know I’m from another planet so – what’s the big deal?

Ya ya…..the “reptilian thing” – I hear it all the time. Those “eyes” go back generations bud, so you can chalk it up to genetics. Whatever.

Key thing is……my eyes are open.

The Ukrainian Prime Minister and his “entire cabinet” have now stepped down, as The Ukraine is unwilling to be “strong armed” by The IMF and the ridiculous parameters set forth, in order for it to secure further funding and “supposedly” salvage it’s economy.

The IMF / Western clowns / Obama just took another punch in the face as now “even Germany” is  looking to “swing East” and keep the lights on / gas flowing a little longer.

What? You haven’t heard? No big story on your local news / CNN?

I thought not. It’s summer – no need to be concerned.

Grab another burger and “for sure” drink another liter or two of Coke – you’ll be fine.

[youtube=http://youtu.be/LZp29Qeu8_U]

 

 

 

Equities Exhausted – USD Double Top

Forex Kong 6 Comments

It’s been a tough grind here as of late, with such low volume trading leaving so many asset correlations stuck in the mud. Traders looking for the usual “signals” in one asset class with hopes of “putting it all together” have been pushed around and pulled back and forth – left struggling to “find an answer” within the continued “day-to-day chop”.

A tough market to navigate with Central Bankers hiding behind every corner, and with such low volume it would appear that on many days…..the market just seems to be sitting there – doing nothing.

Oil looks to be heading lower here and USD appears tired now sitting at its near term “double top” ( as seen via $dxy ).

Gold’s pullback appears to be resolving itself – sputtering out at a pretty solid area of support around 1292.00, while U.S Equities ( as well EU equities and Japan ) look weak, tired and exhausted.

Does anyone else expect that next weeks “U.S GDP report” will disappoint? And that perhaps markets are “finally considering” things aren’t nearly as rosy as the U.S Media continues to suggest?

It would have to have been “some kind of amazing quarter” ( the past 90 days only ) for the report to make up for the incredible ” -2.9 % loss in growth”  reported in the first quarter now wouldn’t it?

Stars would clearly align with USD moving lower, gold moving higher and “global equities” finally taking a break after the SP 500 has made it nearly 800 days straight without a meaningful correction.

Food for thought moving into next week. Perhaps you’ll want to take a peak at your computer / trade account a little more regularly.

Have a good weekend everyone. Enjoy the sun!

 

 

BRICS Nations – Bypass Washington With New Bank

Forex Kong 1 Comment

I’m sure you are familiar with the “BRICS” nations ( being Brazil, Russia, India, China and South Africa ) right?

Well…..disatisfied with The United States “overwhelming influence on global finance” these fellows ( accounting for almost half the world’s population and about a fifth of global economic output ) have recently put their heads together ( and lots of money ) and started “their own” development bank.

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank,is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) as an alternative to the existing World Bank and International Monetary Fund.

The 100 billion dollar bank ( complete with another $100 billion currency reserves pool ) is aimed at funding infrastructure projects in developing nations, and will be based in Shanghai, providing these nations with access to funding “outside” the usual channels of World Bank or IMF funding.

The genie is clearly out of the bottle here, as a growing number of extremely powerful and influential nations continue to move further and further away from Washington’s insane monetary policy and stranglehold on global financial movements.

You wanna impose more sanctions on Russia? You want to keep printing U.S Dollars like toilet paper? Have at it Obama – knock yourself out.

A major game changer here as The NDB has finally arrived.

more here: http://thediplomat.com/2014/07/3-reasons-the-brics-new-development-bank-matters/

 

A Question? – For Fellow Forex Traders

Forex Kong 10 Comments

You are all hotshots – I know.

So…..tell me.

As many of you have suggested “trading the fundamentals” is akin to “reading the entrails of dead animals” ( essentially suggesting that “pure technical analysis” is sufficient ) – what are your thoughts on USD/JPY?

JPY ( Japanese Yen ) being the largest contributing factor in the current and seemingly “never ending rally in risk” ( as Japan’s “printing machine” currently dwarfs that of The United States ) – why isn’t USD/JPY making “massive upside moves” along side the ridiculously manipulated run up in U.S Equities?

If currency markets where “taking the bait” wouldn’t we see USD/JPY bursting higher, then higher, and even higher alongside the current ponzi playing out in U.S Equities?

USD_JPY_July_23_2014

USD_JPY_July_23_2014

From a purely technical perspective the chart pattern seen above ( a descending triangle ) is extremely bearish – suggesting that the pair will “eventually break through support” and likely waterfall lower.

The Central Banks of both Japan and The Unites States are hell bent on preventing this from happening but…..would you imagine the opposite?

Risk at all time highs…but the “ultimate suggestion” of risk ( borrowing JPY at 0% and investing it in U.S Equities” in seeking yield ) hasn’t done jack shit for the past 6 months.

I invite you all to weigh in – as fellow readers can only benefit from the potencial “pissing match ” to ensue.

Perhaps a cat’s got your toungue? Or maybe you’re out in the back yard now…looking to kill one and have a good look at it’s insides – with hopes of figuring this out.

Good luck with that.